Would Elizabeth Warren’s Wealth Tax Work?

Sen. Elizabeth Warren (D-MA) has laid out an ambitious slate of proposals as a candidate for the 2020 Democratic presidential nomination: universal childcare and pre-K, free college tuition and student debt relief, building affordable housing, combating the opioid crisis and more. Her plans would involve some $3 trillion in spending over 10 years, according to estimates by her campaign cited by The Washington Post — and they would all be paid for by higher taxes on the wealthy and corporations.

But, the Post’s Toluse Olorunnipa reports, “Warren’s ambitious agenda relies on two assumptions that defy a long history of U.S. policymaking: First, that the country’s wealthiest taxpayers won’t find ways to evade the targeted tax hike she proposes; and second, that new entitlement programs won’t result in ballooning costs that plunge the federal government deeper into debt.”

Olorunnipa notes that a recent poll of about 40 economists by the University of Chicago Booth School of Business found that 73% agreed or strongly agreed that Warren’s proposed wealth tax “would be much more difficult to enforce than existing federal taxes because of difficulties of valuation and the ways by which the wealthy can under-report their true wealth.”

One of the economists behind Warren’s wealth tax plan, Gabriel Zucman of the University of California at Berkeley, told the Post that Warren’s plan is designed to limit tax evasion and that the estimate that it could raise $2.75 trillion over 10 years factors in 15% tax avoidance. “If it’s properly enforced, and there’s a serious effort at having no exemptions and enforcing it strongly, then it can collect a lot of tax revenue,” he said.